Standing Committee F

[Mr. Joe Benton in the Chair]

Employment Bill

Clause 34 - Procedural fairness in unfair dismissal

Amendment proposed [this day]: No. 78, in page 38, line 1, leave out from '(1),' to 'shows' in line 4 and insert 
'failure by an employer to follow a procedure in relation to the dismissal of an employee shall not be regarded for the purposes of section 98(4)(a) as by itself making the employer's action unreasonable if he'.—[Mr. Marris.]
 Question again proposed, That the amendment be made.

Alan Johnson: I was in the middle of my rather feeble peroration. Just to recap, we were talking about the effects of Polkey and I explained how the new regime will strengthen that judgment. Most cases that we examined, which fell under the Polkey judgment, applied to breaches in procedure that are now covered by the minimum standards—the three-steps procedure. I also explained that, crucially, there remains a requirement for the dismissal to be fair, which is what new section 98A addresses. However, there was some perceived ambiguity so I explained that, having checked amendment No. 78 with parliamentary counsel and having had it confirmed that it achieved the desired effect, we were prepared to accept it. We were not prepared to accept amendment No. 27 because it does not have the required effect, so I urged hon. Members not to press it.

Philip Hammond: It comes from the wrong party.

Alan Johnson: That is true, but that is not why I asked hon. Members not to press it. A number of examples were given to show the way in which the Polkey judgment has worked and why the restoration of the no-difference test would, in my hon. Friend's view, be damaging. I explained that those examples would still have been unfair dismissals because they would not have met the basic need to be fair in all other respects.
 I gave another important example of the way in which the current procedures do not work adequately. An employer who dismissed a number of employees for racially harassing their colleagues lost his case solely because of a procedural error, even though the tribunal acknowledged that it would have made no difference to the outcome. It applied the only measure that it is allowed to apply, which was an award of no 
 compensation to the employees—the worst of all possible worlds. Although the case was classified as unfair dismissal, there was no compensation and no one felt satisfied with the outcome. The background to the case was that the manager who had been charged with hearing the initial appeal decided to double check the complainants' point of view. Because the dismissed employees did not see transcripts of those second interviews with the complainants—they had had full opportunity to consider and comment on the original witness statements—the tribunal found that dismissal was unfair on procedural grounds. Under the new proposals, the tribunal would have discounted the procedural error since it made no difference to dismissals that were fair in every other way. 
 The Bill meets the requirement to ensure that dismissals are fair in every other respect. Amendment No. 78 seeks a spelling out of the fact that a no-difference line of defence where a procedure has not been followed does not, by itself, mean that the employer has acted reasonably. The drafting is fine and we are prepared to accept the amendment, but hope that amendment No. 27 is not pressed.

Philip Hammond: I apologise if this was covered when I was not in Committee before lunch, but can the Minister explain what will be the practical impact of the opening phrase of new subsection (2), ''Subject to subsection (1)''? I can understand how things might work if subsection (1) said,
 ''An employee who is dismissed shall'' 
subject to subsection (2), 
''be regarded for the purposes of this Part as unfairly dismissed''. 
However, I cannot understand what ''subject to subsection (1)'' at the beginning of subsection (2) means. It appears to me that it could undermine the entire purpose of the subsection.

Alan Johnson: I do not think that that is the case. It reinforces subsection (1), making it absolutely clear that the fact that a procedure has not been followed does not by itself mean that the employer has acted unreasonably. Amendment No. 27 was designed to do that, but failed, for the reasons that I gave this morning. Of course, the whole point of Polkey is whether the procedural error, in procedures over and above the minimum standards, would have made any difference to the decision to dismiss. That is the acid test that has to be passed. With that clarification, I urge that amendment No. 78 be accepted, and that amendment No. 27 should not be pressed.

Philip Hammond: The Minister, in his closing remarks, referred to procedures ''over and above'' the minimum standards. Are we to understand that subsection (2) applies only to procedures over and above the minimum statutory procedures? Is that what the Minister is trying to explain?

Alan Johnson: Yes. That is what I explained at some length this morning. I understand that the hon. Gentleman could not be here.

Tony Lloyd: I have listened carefully to the Minister's explanation. Much of the argument turns on points that are difficult to interpret in such an exchange. In the end, it will be decided on what tribunals do and do not do in practice. The difference between the position of those concerned about the abolition of the Polkey test and that of the Minister is that he says that the tribunal will inevitably have to have regard to fairness anyway, even if subsection (2) is used. In other words, even if the employer can demonstrate that unfair dismissal is not automatic because of procedural failure, he will still have a duty to demonstrate that the dismissal is fair. That is not necessarily the view of all those who have looked at the position.
 The suggestion is that once the Bill becomes law, the tribunal will be guided by a different test, that which is in the Bill. Nowhere is there a duty on the tribunal to examine the question of fairness. More to the point, nor is there the opportunity for it to use the test of fairness. Much will turn on the decision made about that. The Minister is right to argue, with regard to the tribunal's judgment in, for example, cases of racial harassment, that it is unfortunate if matters proceed simply because of non-relevant procedural detail. I do not think that anyone is arguing for that. However, it is not such an unsatisfactory judgment if the tribunal rules that technically the dismissal is unfair but, in practice, no award is made because it is a hollow victory, of a kind that the courts more generally are used to giving. At best, a hollow victory is an indictment of those who took the case forward. 
 I hope that the Minister can reflect on the serious points that have been raised, although I do not think that he will change his mind this afternoon. This is not, as I said this morning, a question of people digging themselves into trenches and trying to defend the indefensible. It is a concern generated by real cases that have been through the tribunals and have been found to be unfair. There is a strong fear that there will now be no basis for tribunals to deliver the judgments that were delivered in such cases. 
 We have time before Report, and certainly before the Bill goes to another place, to consider such matters. I hope that Ministers will continue to listen to the debate. It is an important one that is causing anxiety outside.

Brian Cotter: I shall not press amendment No. 27.
 Amendment agreed to.

Brian Cotter: I beg to move amendment No. 49, in page 38, line 12, leave out 'Chapter 1 of'.
 Clause 34(2) states that a tribunal will find that there has an unfair dismissal where the employer has, by their own fault, failed to follow the ''relevant statutory procedure''. That is achieved by amending the Employments Rights Act 1996. Schedule 2 sets out the relevant statutory procedure, which is known as the standard dismissal and disciplinary procedure. However, clause 34 fails to make an explicit reference to the modified procedure found in chapter 2 of part 1 of schedule 2. The modified procedure is therefore 
 outside the remit of clause 34. That means that if the employer uses the modified procedure, which may be appropriate to his circumstances, he can still be judged to have unfairly dismissed the employee even if all steps have been taken correctly to adhere to the modified procedure. 
 That has important implications, as according to the Library notes accompanying the Bill the modified standard is intended for use in cases of gross misconduct where summary dismissal is justified without notice. So, for example, I as an employer may have decided automatically to dismiss an employee because he has assaulted another employee. In doing so, I have ensured that I have conducted the dismissal in an appropriate manner by following the modified procedure set out in schedule 2. However, because clause 34 does not cover that modified procedure, I can still be deemed to have unfairly dismissed my employee. 
 The amendment would ensure that if an employer dismisses an employee for gross misconduct, the modified procedure, correctly followed, will protect him from claims that he has unfairly dismissed them.

Alan Johnson: Well spotted, as someone might recently have said at Athens airport.
 I am grateful for the amendment, which highlights a significant oversight in the drafting of clause 34 relating to protection against unfair dismissal where the modified dismissal and disciplinary procedures set out in chapter 2 of part 1 of schedule 2 have not been followed. 
 Clause 34 inserts new section 98A into the Employment Rights Act 1996, making it unfair to dismiss an employee without completing the new statutory procedures. That means that employers will have to carry out the standard three-step procedure when dismissing an employee in order to avoid liability under new section 98A(1). Therefore, if an employer complies only with the modified two-step procedure set out in chapter 2 of part 1 of schedule 2, he will always automatically be found to have dismissed unfairly, as the hon. Member for Weston-super-Mare (Brian Cotter) said. 
 We intend to make regulations under clause 31 to provide for the modified procedure to apply where an employee has been summarily dismissed—in other words, dismissed without notice on the grounds of gross misconduct. It is important that in such circumstances employers should not be required to complete the full standard procedure. 
 However, much as I welcome the amendment because it draws attention to the problem, it would not achieve the desired end. The matter is more complex, in that further revision of the clause is needed to ensure that under new section 98A(1) there will be a finding of unfair dismissal in cases of summary dismissal only when the modified procedure has not been completed and that any question about the application, completion or failure to comply with either procedure is judged by the same criteria that will be used for the purposes of clause 31. That is best achieved by ensuring that the regulatory powers in clause 31, which deals with mitigation, apply equally to clause 34 so 
 that there is complete consistency. That will be essential if employers and employees are to have a clear understanding of when the modified two-step procedure, rather than the full three-step procedure, needs to be followed. I therefore intend to table an amendment on Third Reading and invite the hon. Gentleman to withdraw the amendment.

Philip Hammond: Can the Minister explain why he is about to invite us to vote that the clause stand part of the Bill when he has just said that it is flawed, understood to be such by the Government and requires amending, although he has failed to table the necessary amendments? That is a serious abuse of the Committee's procedures. We cannot possibly vote that a clause stand part if the Minister says that it is flawed.

Alan Johnson: I have served on many Committees in which similar things have happened, including Committees on Finance Bills with the hon. Gentleman. If, during the proper scrutiny of a Bill, a member of the Committee spots a technical error, it is perfectly reasonable for the Minister to say that it will be amended at the first available opportunity and to ask the Committee to agree that the clause stand part on that basis. The wording of the amendment is faulty because it does not apply consistently to clause 31, and we shall ensure that our amendment does so.

Norman Lamb: I want to press the Minister a little further on his response to my hon. Friend the Member for Weston-super-Mare. We are pleased that he recognises that the clause needs further amendment, and appreciate that it is sensible to ensure that that has the desired effect. However, will he say more about when the modified procedure will apply? That procedure entails dismissal without any hearing at all, and only the right of appeal following dismissal. During the sitting on Thursday 13 December, the Minister said that it would apply only in extreme cases of gross misconduct.
 I find it hard to imagine in what circumstances it would be appropriate to dismiss someone without any hearing, and with only the right of appeal following dismissal. In cases of violent misconduct, for example, the right way to deal with the situation immediately is to suspend the employee, not to dismiss them without the right of a hearing. There may be all sorts of reasons, such as provocation, that need to be investigated to determine whether dismissal is the right sanction. Will the Minister clarify the hopefully limited circumstances in which it would be appropriate to dismiss someone with no hearing?

Alan Johnson: We touched on this when we debated schedule 2 and its relevant clauses. For the absence of doubt, under the two-step disciplinary procedure for gross misconduct an employer may legally be entitled summarily to dismiss an employee without notice if his or her misconduct has been so serious as to amount to a fundamental breach of contract. That is often described as gross misconduct. The law does not specify what conduct justifies summary dismissal, and it is for the courts and tribunals to decide in the light of all the circumstances whether it is justified in a
 particular case. We envisage that the modified dismissal and disciplinary procedure will apply in such special cases. That requires employers only to write to the employee after dismissal, but gives the employee an opportunity to appeal the decision.

Norman Lamb: Is the Minister saying that in all cases of gross misconduct it will be fair to dismiss without a hearing, allowing the employee only the right to an appeal?

Alan Johnson: In my experience, if someone in the Post Office was watched for a period of time and was accused of stealing letters or interfering with the mail, that would be classed as gross misconduct, as would severe violence against an employer. There is no disagreement about that and there is nothing new about the procedures. We have already debated and agreed the fact that there needs to be a modified procedure for discipline in such cases, and that in cases involving grievance procedures, where an individual has already left the employment for various reasons, it would be illogical to ask them to go back and reform a bond with the employer, which has already been broken, to go through the third step.

Norman Lamb: Does the Minister agree, especially in the light of his experience with the Post Office, that in many cases of alleged gross misconduct the facts are complex and that it is essential in the interests of natural justice to have a hearing before reaching a decision to dismiss? If he is saying that the modified procedure will apply in all cases of gross misconduct, then in all those complex cases where the facts need to be canvassed at a proper hearing, the employee will have no right to such a hearing.

Alan Johnson: We are talking about workplaces where there is no procedure whatsoever and where a procedure is being applied for the first time. We accept the need for a different approach to cases of gross misconduct. We have already debated that at some length. Under the modified discipline procedures in schedule 2, the employer must set out in writing the employee's alleged misconduct that has led to the dismissal and the employee's right to appeal against dismissal, and send a copy of the statement to the employee. The employee must inform the employer of his or her wish to appeal and the employer must invite him or her to attend a meeting.
 What is missing is a provision relating to the case having to be properly investigated. This morning—when the hon. Gentleman was not here—we discussed the case of an employee who had been dismissed for theft in the context of the lack of an investigatory clause in the basic two and three-step procedures. I explained that if the employer had not taken reasonable steps to investigate the allegations made against the employee, the employment tribunal would be unlikely to agree that the dismissal was fair. That plays a part in the case having to be reasonable in all other respects.

Rob Marris: Does my hon. Friend agree that some cases of gross misconduct justify summary dismissal and some do not, and that the Government's proposed regulations could clarify those two categories?

Alan Johnson: That is exactly why we intend to set out in regulations the kinds of cases to which the modified two-step procedure could apply. Those would be subject to the affirmative resolution procedure.
 The amendment, which relates to chapter 1, but not chapter 2, identifies a technical fault in the Bill. We are pleased to concede that it was well spotted, and we shall table an amendment on Report.

Brian Cotter: I do not intend to labour the point because the Minister has graciously accepted our argument. It is gratifying when we raise a point in Committee that needs to be addressed. On the Minister's assurance, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Brian Cotter: I beg to move amendment No. 28, in page 38, line 16, at end insert—
'(c) references to 'a procedure' or to 'the procedure' in subsection (2) refer to non-statutory procedures that the employer is obliged to follow.'.
 The amendment would further clarify the types of procedures to which new subsection (2)—in lines 3 and 5 of page 38—refers. The new subsection refers to the fact that an employee shall not be considered to have been unfairly dismissed because of a failure to follow procedure, if following it would still have resulted in dismissal. On reading the explanatory notes, the Government seem to intend that to apply to any procedures outside the minimum statutory ones. For example, the procedure referred to in lines 3 and 5 is assumed to include additional procedures such as those included in the employee's contract, or those based on union agreements. However, as it is currently unclear that those are the procedures to which new subsection (2) refers, the amendment is designed to tighten the wording of the Bill and ensure that the procedures that the employer is required to follow are the non-statutory ones. It would make it explicitly clear that the principle is intended to apply to procedures outside the statutory minimum, such as those used in the workplace taken from the employer's handbook. 
 Lines 3 and 5 of the new subsection refer only to ''a procedure'' or ''the procedure'', so it is not explicitly clear that the procedures referred to are those outside the statutory minimum. The amendment would ensure that an explicit reference is made to them and I look forward to the Minister's response.

Alan Johnson: The amendment is unnecessary. One effect of clause 34, which inserts new section 98A, is to reinforce the new minimum disciplinary and dismissal procedures by making it automatically unfair to dismiss employees without following the procedures. That is achieved in new subsection (1). The affect of new subsection (2), is that it will not be unfair to
 dismiss an employee without following a dismissal procedure if the employer can show that following it would have made no difference to his decision to dismiss. That new subsection begins with words that are relevant to a comment made by the hon. Member for Weston-super-Mare: ''Subject to subsection (1)''. An employer will be able to escape a finding of unfair dismissal only by showing that following a procedure would have made no difference to the decision to dismiss, and only if it was a procedure that is not covered by new subsection (1)—a procedure other than the statutory procedure.
 Failure to follow statutory procedures will always be unfair and the wording achieves the desired effect. The minimum procedures, which will always be unfair, and the no-difference test, which is a partial reversal of Polkey in some respects and a strengthening of it in others, will only apply to disciplinary procedures over and above the basic minimum.

Norman Lamb: To return to the point that I was making, I understand the Minister's comments to mean that a large organisation might have complied with the modified procedure in a case of gross misconduct—a complex case with complex facts. The organisation might have chosen to dismiss without a hearing; the employee has gone and an appeal has been allowed, and then dismissed. In those circumstances, an employer could go to a tribunal and say that the person would have been dismissed anyway, thereby establishing that the procedure followed had been fair.
 A large organisation such as the Post Office will be able to dismiss people for all the different and complex types of gross misconduct without having had a disciplinary hearing if it can establish that conducting such a hearing would have made no difference.

Alan Johnson: We went through the issue this morning. The Polkey judgment was made in 1979 and reversed in 1988. The question is whether the employer would have made the same decision had the procedures been followed. We cannot get away from that.
 As I went to great lengths this morning to explain, the words ''not automatically unfair'' do not mean the same as ''fair''. If an employer says at an employment tribunal that they would have made the same decision anyway, the tribunal will not say, ''Okay, that is fine''. The employer must prove that the procedural errors, which by definition will be procedural errors over and above the basic minimum, would have made no difference to their decision to dismiss. 
 An employer may say that their failure to follow an investigation set out in the disciplinary code of the Post Office made no difference to their decision, but they are hardly likely to get away with that at an employment tribunal. Indeed, we said this morning that in most cases that we have seen, the failure was in carrying out the basic three steps. An appeal was not held, the employee was not told of what they were accused and so on. We also said that if we did not have a change to Polkey and introduce the no-difference test over and 
 above the minimum standards, we would be discouraging employers from having more elaborate and sophisticated procedures than the basic minimum. 
 The fear that the hon. Gentleman raises has been expressed to me many times, but is not well founded. The Bill will ensure what we mean it to ensure. The basic minimum standards must be met, otherwise the dismissal is automatically unfair. We take a judgment on procedural issues over and above the minimum. That in no way detracts from the need for the employment tribunal to judge that the dismissal was fair in all other respects. 
 I hope that I have reassured hon. Members that the amendment is unnecessary. I ask the hon. Member for Weston-super-Mare to withdraw it.

Brian Cotter: On that basis, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Philip Hammond: I beg to move amendment No. 64, in page 38, line 26, leave out 'be required to'.

Joe Benton: With this we may discuss the following amendments: No. 66, in page 38, line 28, at end insert
'and in determining whether such an award would result in injustice the tribunal shall have regard to the resources available to the employer to enable him to ensure compliance with statutory procedures'.
 No. 67, in page 39, line 10, at end add 
'and in determining whether such an award would result in injustice the tribunal shall have regard to the resources available to the employer to enable him to ensure compliance with statutory procedures'.

Philip Hammond: Clause 34(3) states:
 ''An employment tribunal shall not be required to make an award under subsection (5) if it considers that such an award would result in injustice to the employer.'' 
The tribunal will therefore not be required to make an unjust award, but it will not be prevented from making one. Removing the words ''be required to'' would make it clear that the tribunal would not make an award if it would result in injustice to the employer. It is difficult to imagine how the Minister will justify leaving in words that will allow a tribunal to make an award that would explicitly result in injustice to the employer. I hope that he recognises the need to deal with that. 
 If I may stretch the scope of my amendment, the same point applies to new subsection (1B), where the words ''shall not be required'' are found again. An amendment that dealt with that subsection was technically imperfect and was not selected, so if the Minister deals with the substantive point, I will be happy to withdraw the amendment and see if it can be covered later. 
 Amendments Nos. 66 and 67 would add to the definition of injustice to the employer. I seek an assurance that there will still be a size or sophistication test and that when the tribunal examines questions of injustice to an employer in making an award, it will take into account the size of the employer and the 
 resources that are available. It would not necessarily have to judge the size of the employer. A small law firm that specialised in employment law might be expected to have the resources, but a motor repair workshop, to use an example that we have used before, that employed three people might not have enough resources to ensure compliance. 
 Again, these are probing amendments. I will be happy to hear the Minister tell us—as I believe that he may—that the existing procedures will remain unaltered and that size, sophistication and employer resources will be taken into account. I should be grateful for that confirmation.

Alan Johnson: As the hon. Gentleman explained, amendment No. 64 is designed to ensure that tribunals will never give a financial award on reinstatement or re-engagement if they believe that it would result in injustice to the employer. Subsection (3) already states that tribunals are not required to give the award if it would result in injustice to the employer. It is almost impossible to imagine a situation in which the tribunal would make an award that it considers to be unjust when it is under no statutory obligation to do so. I fail to see the necessity for such a change.
 Amendment Nos. 66 and 67 would appear to lessen any burden on a small employer by directing tribunals to have regard to the resources available when deciding whether applying either the minimum award or award on reinstatement or re-engagement would result in injustice. It would be wrong to attempt to guide tribunals on what constitutes injustice. Circumstances will vary enormously, and tribunals will want to consider all relevant factors when considering whether it is just to make the award. I would not want to fetter their discretion, but it is likely that they might want to take into account the potentially greater impact of a fixed award on a business of limited resources. I repeat that it is right that tribunals should decide. 
 The suggestion that small employers—including our famous garage in Hull—will struggle to put the core procedures in place and follow them whenever necessary underestimates small firms and overestimates the complexity of the procedure. We have ensured that the statutory procedures represent basic and fundamental fair minimums and are not pitched at a level where following them will create difficulties for any employer of any size. Small employers that do not use procedures can only benefit from adopting the statutory minimums, because doing so will increase the likelihood of resolving a dispute before it reaches a tribunal. 
 I acknowledge that there clearly will be circumstances in which it will be reasonable for the employer not to follow the minimum procedures, or not to follow all of them, as we have discussed on various occasions during the Bill's consideration. We will make provision in regulations to ensure that employers will not be penalised in such circumstances, but in the vast majority of cases it is right that employers who do not meet their obligations to complete the basic procedures should face a penalty, except when a tribunal considers that such an award 
 would be unjust. That may well have taken into account a minor breach of the statutory procedures that apply to small businesses, whose resources would be severely affected by the penalties in the clause. I therefore invite the hon. Member for Runnymede and Weybridge to withdraw the amendment.

Philip Hammond: For two and a half weeks I have listened to the Minister handing himself enormous powers by regulation to fetter the discretion of the tribunal in every imaginable direction. It is therefore a bit rich for the hon. Gentleman now to say that he would not want to fetter the discretion of the tribunal. That is not the tenor of what the Government propose to do with the regulation powers they are giving themselves in this part of the Bill.
 I am not persuaded by the Minister's argument. I am anxious about the direction and the packaging of clause 34, which is perhaps the most sensitive clause in the Bill. Some Back Bench amendments have been accepted and the Minister said that others need to be made, but unfortunately he did not tell us precisely what those amendments will be. I had hoped that the Minister would be more robust in suggesting that he would not expect small and less competent employers to be treated harshly and that the provisions would take into account a genuine lack of capacity and the innocent failure to comply, as we discussed earlier. 
 In view of the Minister's determined resistance to the uncontroversial proposal that the words ''be required to'' be taken out, I will not press the amendment to a vote. We shall return to the matter when we discuss the general issues in the clause stand part debate. 
 I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause, as amended, stand part of the Bill.

Philip Hammond: The Question before the Committee should include the words ''and as to be amended''. At the risk of repetition, which does not worry me much, I say that clause 34 is a sensitive part of the Bill and I am surprised that the Government have accepted amendments that may upset its delicate balance. It was not apparent to me that the hon. Member for Wolverhampton, South-West (Mr. Marris) tabled a Government-planted amendment or, indeed, one that the Government agreed to in advance. I am not sure that that was understood outside the House, although it may have been understood by the TUC.
 The hon. Member for Manchester, Central (Mr. Lloyd), who is back in his place, urged the Minister to go still further and revisit some of the essential issues in clause 34 at a later stage of the Bill. The Minister has already embarked on the slippery road of accepting amendments and he has been urged by his hon. Friend to make more changes. The slightly grudging consensus about this part of the Bill will be 
 undermined if changes are slipped in now as a result of pressure from Government Back-Bench Members or from outside bodies.

Tony Lloyd: For understandable reasons, the hon. Gentleman was not with us this morning. If he had been, he would have heard several of his hon. Friends sympathising with the Minister's objectives. The debate concerned whether the Bill will achieve what we want it to: there was no difference in objectives or ambitions. The hon. Gentleman should agree with fairness in industrial relations.

Philip Hammond: The hon. Gentleman knows that I am in favour of fairness. One of the principal objectives of all legislation is that people should be treated fairly, and I abhor unfairness in all its forms. However, the hon. Gentleman's approach is slightly naive. This is the most sensitive clause in this part of the Bill, and it is, unfortunately, being tampered with. If the Minister is tempted to tamper with it any further, as has been suggested, he will provoke a reaction.
 Since the debate, I have examined the briefing from some of the small employer organisations. It may surprise the Minister to learn that the significance of the words at the beginning of proposed new section 98A(2), ''subject to subsection (1)'', has not been fully appreciated by those outside the House. Some commentators have interpreted it as restoring the state of affairs before the Polkey judgment. Clearly, that is not the Minister's intention, so some people will be disappointed that they over-egged the pudding in their interpretation of the Government's actions. They will also be disappointed that the Government are to retreat further from their previous position, which they defended vigorously. 
 I made unkind comments about the Law Society's amendments earlier, so I am delighted that its efforts today seem to have achieved a 1-1 draw against the Government's draftsmen. I am disappointed that the Minister has not produced the amendments that he says will be necessary for this clause and for clause 31. I find it strange that we debated clause 31 without the Minister mentioning that it has a fundamental flaw. After the debate, and clause stand part, he tells us that he will amend it. 
 This morning, I mentioned parliamentary sloth. The Liberal Democrat amendments that deal with the Law Society's points, which the Minister has accepted, were tabled on Friday. I would have thought it possible that the parliamentary draftsmen—with guidance from Ministers and civil servants—could have made amendments available today. They would have been starred, Mr. Benton, but you could have used your discretion if you felt it useful for the Committee to consider them. 
 I am disappointed that the Government have not tabled those amendments that they described as essential. They could have been considered today, but will now come at a stage when detailed consideration will not be possible. As we all know, the Report stage of the Bill will be timetabled. New clauses will be considered first. It may be the case—it often is—that we will not reach amendments in time to debate them 
 and that they will simply be voted on at the end of the allotted time. That is unfortunate. As there has been a clear failure in the Bill's drafting, the Government should concede that detailed scrutiny of this part of it and of any further amendments would be appropriate and beneficial. That would avoid unanticipated pitfalls requiring further changes to the legislation at a later stage. 
 I am concerned about tampering with this delicately balanced part of the Bill and I am disappointed that the Minister has not tabled the necessary amendments for us to consider.

Norman Lamb: I endorse the comments of the hon. Member for Runnymede and Weybridge (Mr. Hammond) about the importance of proper scrutiny of the amended clause. As it is not available, that opportunity will be missed. I am grateful that the Government have recognised the merit of our amendment, even though it does not achieve the required objective and so a further amendment is necessary. I share the concern about the lack of scrutiny.
 I stubbornly stick to the view that the combination of the effective reversal of the Polkey case and the modified procedure will result in a substantial weakening of the protection for employees facing allegations of gross misconduct in certain circumstances. I urge the Minister to look carefully at the potential impact on fairness to employees. It is fine in certain cases where the evidence is stark and obvious, but in the more complex cases there is a weakening of the protection for employees, who can be dismissed under the modified procedure without a prior hearing. I urge the Minister to consider whether that issue could be addressed by an amendment or by the regulations limiting more than has been so far indicated by the circumstances in which the modified procedure would apply. I would expect there to be grave concern among Government Members on the implications of the loss of the right to a hearing before dismissal in complex cases of allegations of gross misconduct.

Rob Marris: I should like my hon. Friend the Minister to summarise one or two of the issues to which we have referred during consideration of this part of the Bill, as clause 34 is the linchpin. He has clarified that under the basic procedure the existing right to be accompanied will continue and that under schedule 3 there will be a right to a fair process rather than a fair hearing. I confess to being unclear as to whether there is a duty on the employer to investigate and I hope the Minister will clarify that.
 I turn to the contribution of the hon. Member for North Norfolk (Norman Lamb). Will the Minister clarify a time frame for a review of the procedures in clause 34 and schedule 2 to see whether the problems posed by the hon. Gentleman are realised? I asked this morning whether the change in emphasis of Polkey leads to a dilution of existing procedures that are better 
 than the schedule 2 minimum, and whether subsection (2) of new section 98A would lead to employers simply not following the enhanced procedures.

Alan Johnson: The hon. Member for Runnymede and Weybridge must have had a bad time at the Adjournment debate, as he is not his usual, charming self. Understandably, he could not be with us in Committee this morning.
 I struggle to see what great concessions I have made on the clause. We have had a good debate, and we went into the matter in some detail. My hon. Friend the Member for Wolverhampton, South-West called the clause the lynchpin of the Bill. We discussed clause 29 and schedule 3 and agreed that there should be a statutory minimum procedure. We agreed that there were cases where even those statutory procedures would not apply, such as cases of bullying, harassment and violence, which will be set out in regulations. We also agreed that a modified procedure is needed to deal with certain cases of grievance and discipline. 
 Clause 34 deals, in effect, with the no-difference test. This morning's debate made it clear that we have introduced those basic provisions and that employers are expected to comply with them. If they do not, a dismissal will automatically be unfair. We also discussed the fact that the change to Polkey referred to discipline procedures above the minimum. 
 Several Opposition Members, including the hon. Member for Hertford and Stortford (Mr. Prisk), expressed concern that there may be an inconsistency in having minimum procedures, encouraging people to abide by them and then making it seem as if they did not have to abide by them because the no-difference test would be restored. I explained that we were setting a minimum standard, encouraging people to move to a more sophisticated system and taking account of the ACAS code. If we did not reverse the no-difference test, employers would rightly wonder why they should move to a more sophisticated code if they could be found to be wrong on a minor error of procedure, irrespective of the fundamentals of the case. 
 I accepted the amendment tabled by my hon. Friend the Member for Wolverhampton, South-West on the basis that we had made it clear that nothing in clause 34 changed the requirement of the employment tribunal to ensure that the case of unfair dismissal was fair in other respects. That obligation is placed on the tribunal. My hon. Friends believed that that was not clear enough in relation to clause 34(2)(c), and I therefore accepted the amendment in the spirit of making clear what we had set out to do. We are criticised for accepting sensible amendments and for not accepting them. The amendment is sensible, and we accept it. I reassure the hon. Member for Runnymede and Weybridge that that makes no difference to the fundamentals of the Bill, to the issues on which we consulted or to the message that we sent out to employers and employees about the new rights and responsibilities in the Bill. 
 I also accepted the other amendment. Once again, we are damned if we give no warning of forthcoming amendments and we are damned if we listen to a carefully argued amendment and respond by saying 
 that we will table an amendment. The amendment does nothing other than point out, as the hon. Gentleman did, that there was an error in the drafting. Because of that error, an employer who followed only the modified procedure that we agreed last week under clause 29 would automatically be found to have dismissed unfairly. We must deal with that and we are doing so through an amendment. It is no big deal. Employers' organisations are unlikely to be marching on Downing street tomorrow. This part of the Bill does not fundamentally change anything. 
 The concerns of my hon. Friend the Member for Manchester, Central are understandable and other Government Members have also asked me to think again. However, I believe that the balance is absolutely right. This morning, my hon. Friend the Member for Wolverhampton, South-West asked whether we would keep the process under review. Once it has been implemented and has had time to take effect, we will consider the employers' argument that reversal of the no difference test will encourage participation in the fuller procedures. As to my hon. Friend's concern—shared by my hon. Friend the Member for Manchester, Central—we would obviously examine the position carefully, but we believe that the balance is just right. None of the amendments—neither the one we accepted, nor the other intended for Third Reading—disturbs the balance. Clause 31 is not being amended. Clause 34 is being amended to make it consistent with clause 31. We are therefore talking about two, not three, amendments here. 
 If members of the Committee have listened carefully to the debate and examined the explanations offered, they should feel happy that we are amending the provisions for the better, without fundamentally changing the principles. The error pointed out by the Liberal Democrats needs to be addressed. 
 The hon. Member for North Norfolk articulated his concerns about summary dismissal. On the basis of my long experience of these matters—I know that he has had experience too—I do not share those concerns. If we get the regulations right—there is at present no requirement for these procedures—it is wrong to insist that employers have to keep someone on the premises—

Norman Lamb: The problem of the employee being on the premises is dealt with, as now, by suspending that employee. That is not a problem: the person is moved out of the way and a hearing is arranged. There is no need to move straight to a dismissal without going through the proper process. As I argued earlier, the employee's rights are reduced.

Alan Johnson: The ACAS code recommends precisely that an employee should be suspended. We have already been over the argument about setting basic minimum standards. Employment tribunals will still be considered, but as to insisting that the person stays in the workplace, I am pleased that the hon. Gentleman agrees that we need a modified code. His argument is similar to that expressed by some of my
 hon. Friends—why do we not implement the ACAS code. We have been round the course on that long enough. I hope that the Committee will accept that clause 34 stand part of the Bill.
 Question put and agreed to. 
 Clause 34, as amended, ordered to stand part of the Bill. 
 Clause 35 ordered to stand part of the Bill.

Clause 36 - Removal of exemption for small employers

Charles Hendry: I beg to move amendment No. 68, in page 39, line 31, leave out from 'procedures,' to end of line 32 and insert
'subsection (3) shall have effect so that the note need not comply with the specified provisions where the relevant number of employees was less than six'.
 The amendment is straightforward. It is designed to take account of the pressures facing small businesses and reduce the impact of these measures on companies employing five people or fewer. At present, the position is that 20 people are enough to allow a company to be exempted. We have not pressed for that because our main concern is with the smallest companies, the micro-firms, which are most vulnerable to the bureaucracy entailed by the provisions. 
 The sort of companies that we are talking about, with five employees or fewer, find it most difficult to survive, even in good times. They face a welter of rules and regulations. We need to go back to how people start a business. They do so not because they want to be tax collectors for the Government or to fill in forms all day, but because they have an idea that they want to pursue. They may not have run a business before and it is quite a brave step. They are not ready for the volume of paperwork that comes their way. 
 The most difficult time for that new business, as I know from experience, is taking on the first employee. It represents a significant act of faith. That person's salary will probably not yet be covered and so one assumes that one can bring in enough new business to cover it, other costs and make a profit. A range of other factors also come into play. One may be paying national insurance contributions for the first time and filling in pay-as-you-earn returns. It may push the business above a value added tax threshold. There may be additional insurance implications and one is taking on responsibility for that person and possibly his family. 
 Perhaps all that is best illustrated by a couple of brief examples. A plumber who has worked on his own and takes on a mate will often not just have to go through the elements that I have described, but may have to buy a new van. He has his mind on a whole range of different things. He may have to train that person and will be distracted from the job in hand while he does so. He then must work that much harder to find new business to ensure that the business survives and prospers. He may have left school at 16 and not be 
 particularly well educated. The minefield of forms and requirements to fill in bits of paper will be alien to him. He is certainly not a lawyer and probably not even a great wordsmith. He is simply someone who wants to run his business as well as he can. Micro-businesses like that do not need an additional level of bureaucracy. 
 The second example is a small corner shop. The guy gets up at 4 am when the papers arrive and is still there late into the evening filling in his books. He will find that his whole life is taken over. When he takes on his first employee, he takes on those additional responsibilities and he does not want further legal requirements. There may also be language problems. While he may know how to run a business hugely successfully, English may not be his first language and he will be dealing with legislation. Although some small firms, particularly lawyers and accountants, may specialise in dealing with details, the overwhelming majority of companies that employ five people or fewer are not in that category. They are small businesses that are often struggling to survive. We should bear such people in mind and try to make their lives that much easier.

Norman Lamb: There seems to be an inconsistency here. Last week, the Opposition argued rightly that it was important for things to be in writing for small businesses. We talked about the corner shop at length and the fact that if things were not in writing, it left scope for ambiguity and uncertainty about what was intended. Yet today, the hon. Gentleman seems to argue that those things should not be in writing. Is there not an inconsistency between the arguments last week and this week?

Charles Hendry: Not at all, last week we argued that the people who most need things in writing are small business people who are most vulnerable. Today we are saying that there is a category of companies that should be exempted completely.

George Osborne: We pointed out that the measures should not apply to businesses under the five-employee threshold. The Minister conceded that many micro-businesses, which he defined as businesses employing between one and four people,
''will not use written communication to any great extent. Indeed, some may have limited clerical facilities.''—[Official Report, Standing Committee F, 13 December 2001; c. 160.] 
We accept that argument, which is why we want to exclude micro-businesses from the procedures.

Charles Hendry: I am grateful to my hon. Friend for that further clarification. I hope that the hon. Member for North Norfolk accepts that there is no inconsistency between the two positions.
 I hope that the Minister will consider the issue carefully. I know that he has an interest, as we do, in ensuring that the welter of bureaucracy that small businesses must deal with is alleviated. The Federation of Small Businesses told us that the measure may be the last straw for small businesses. They say that they are also concerned that overly prescriptive regulations soon become outdated and damage relationships in 
 small firms, where most proprietors do their utmost to help in times of emergency. They are profoundly concerned about the volume of legislation and regulations that already apply. I hope that the Minister will look favourably upon the amendment.

Rob Marris: I seek clarification. If I read the amendment correctly, it would set a trap for small employers. Let us take the example of the plumber who employs his mate. The mate is the only employee; therefore, because there are fewer than six employees, the plumber does not have to give his mate a note of the statutory minimum procedure under schedule 2, on which the Committee has agreed. They fall out, the mate goes to the citizens advice bureau and finds out about the minimum procedure, of which the plumber was not aware. The mate then wins an employment tribunal case under section 98A(1), as inserted by clause 34, because the plumber did not comply with the statutory minimum procedure in schedule 2.
 The amendment would make the cure worse than the disease. When someone becomes an employer, whether a plumber or an accountant, they should get it right and learn good habits from day one. That way, they would not be subject to traps such as the one that the amendment would set.

Mark Prisk: I apologise for not being with the Committee earlier this afternoon, Mr. Benton.
 I support the amendment because I believe that it would restore the principle of exempting the smallest enterprises from the burden of prescriptive disciplinary procedures. That may relate to the argument of the hon. Member for Wolverhampton, South-West. 
 The Bill attempts to change existing procedure under the Employment Rights Act 1996. I do not think that anyone in the Committee doubts the need for good management practice, especially in personnel matters. As a former small business man, I know that an organisation is only as good as its staff. I understand that some firms merely pay lip service to treating their staff appropriately. However, in my experience, the vast majority of businesses, large and small, recognise that only good personnel management will enable them to prosper. 
 Is it right, therefore, to impose on small businesses a prescriptive solution for what may be a sensitive issue? I refer to an excellent submission on the Bill by the Industrial Society. It raised several questions about the balance between the efficacy of legislation and good management practice. It states: 
 ''The best means of ensuring management improves its performance is to promote awareness of the cost benefits of good management and to provide guidance on good practice, especially among small employers. It is very relevant in considering the numbers of tribunal claims involving small firms to remember''— 
my hon. Friend the Member for Wealden made this point earlier— 
that many of them do not have expert employment relations or HR''— 
human resources—
advice to hand. Consequently, they can react without knowledge or rashly. Saying that a procedure must be followed is of itself no guarantee of quality.'' 
That is an important point, because the quality of the measures that clause 36 would impose has been called into question. We have heard how the three-step procedure in some ways falls short of the existing ACAS code and might, in some ways, conflict with it. To reinforce my hon. Friend's point about the perception of the changes from the point of view of the small employer—whether a business or a charity—we should remember what would be involved. 
 First, the small employer would be asked to draft a new written statement for each member of staff. Then, not having expertise in the matters in question, he would be required to take legal advice to ensure that the statement that had been drafted complied with the Bill. The employer would then be required to establish whether he had been able to comply in every respect with the ACAS code or the three-step procedure. We debated earlier whether employers would have to bear in mind the nature of the ACAS code and not just the statutory procedures. There was some uncertainty on that point. The worry arises before all the procedures are required, and even before a case comes to fruition or a dispute takes place, when the three-step procedure comes into force. 
 For all the reasons that I have given, amendment No. 68 provides protection for the smallest of employers. The Federation of Small Businesses has, in recent correspondence, stated: 
 ''The Federation of Small Businesses is concerned that the Bill proposes the end to exemptions for small businesses with one single stroke. Our view is that this will have a devastating effect on the ability of Small Businesses to create jobs.'' 
All members of the Committee would want to bear that in mind. I understand why people sometimes want to know why there is constant concern about how measures will affect small business. There is a danger that hon. Members who have not worked in a small business—a one or two-man operation—will ask, ''What is the problem? Why is it so difficult?'' 
 First, it has been proved that new regulations place a disproportionate burden on the smallest firms, particularly with respect to staffing and payroll. As an example, the administrative costs of the working families tax credit fall on businesses, as we have heard. The firms that the amendment is intended to protect, which employ from one to five members of staff, face yearly costs of about £25 million to administer the working families tax credit. Yet nine out of 10 of those micro-businesses do not employ and have never employed anyone to whom the tax credit is relevant. That type of regulation has a disproportionate effect and the use of clause 36 to remove the exemption would lead to similar problems. 
 Secondly, as a simple matter of practicality, such regulation seems right and proper in a large organisation of perhaps 50 or 100 people, where there may be a gap between the employee and the manager. One can understand the need for a clear procedure there to avoid confusion. However, in a place where up 
 to five people are employed, that seems an unnecessary intrusion. Also, there is a danger that the Government base their proposals on shaky foundations. I point to the recent survey by the Forum of Private Businesses, which states: 
 ''Only 60 per cent. of small firms have a written statement of employment, so this is a shaky foundation on which to build formal dispute resolution procedures''. 
 The amendment is essential because the clause is bad for jobs. Sole traders need to be encouraged to employ more people. We must do whatever we can in politics and in government to ensure that hurdles to the creation of employment are reduced wherever possible. By not amending the clause and allowing the burden to fall again on micro-businesses, we will affect the most vulnerable on the labour market—those who are on its edge and might need a job the most.

Rob Marris: I confess that I am unclear as to whether the hon. Gentleman is arguing that the schedule 2 minimum procedure should not apply to micro-businesses, as he termed them, or whether it should apply, but that those with fewer than six employees should not tell the employees that it did so. Could he clarify his argument?

Mark Prisk: The amendment is clear to me, although I do not have the legal training that the hon. Member for Wolverhampton, South-West enjoys. It would exempt organisations that employ fewer than six people, so it does not have the dangers that the hon. Gentleman seems to expect.
 The 900,000 micro-businesses to which the Minister has referred several times would find the burden onerous and disproportionate. It would be bad for those that they might employ or want to employ. For both those reasons, I strongly support the amendment.

Mark Simmonds: I apologise to the Committee for my voice, which seems to be deteriorating rapidly this morning. I will make it last as long as I can. In the excitement of making interventions on the first Standing Committee on which I have served, I forgot to declare the fact that I am an employer. I hope that the Committee will accept my apologies.
 I have consulted widely with small and micro-businesses inside and outside my constituency. I am sure that many other hon. Members visit small businesses and find that a consistent golden thread runs through the points made by all small business men. They all ask us to remove existing regulations and not to apply further ones to their businesses. No one has said, ''Please, Mr. Simmonds, go and talk to that nice Mr. Johnson and get him to increase the employment legislation on my small business. Get him to make more regulation to create an even more inflexible labour market.'' 
 As my hon. Friend the Member for Wealden said, many small businesses struggle to survive even in what is now a generally healthy economic climate. The great thing about small businesses is that they grow into medium-sized businesses and large businesses, thereby 
 creating employment, moving from one status to another and generating wealth to be distributed among their employees. 
 Even before the Bill has been enacted, many small business men are reluctant to take on additional staff. Existing legislation makes them nervous that if a member of staff proves inappropriate for the business and does not behave properly in some way, they cannot get rid of him quickly enough. One of the benefits of small businesses is that they are quick on their feet and can react to economic and social circumstances at any time. That will change. 
 Government policy and legislation has some serious contradictions. Under stakeholder pension legislation, companies with fewer than five employees rightly did not have to implement stakeholder pensions. Some small companies and micro-businesses in the economy deliberately keep the number of employees below that level so that they do not have to implement them. Ladies returning from maternity leave are not affected by the same regulations in companies with fewer than five employees. The amendment is consistent with some existing Government legislation. 
 The Federation of Small Businesses has said that small businesses cannot take any more regulation without their ability to hold on to jobs, or to create new ones, being compromised. To my mind, that is the crux of the clause. It negates the ability to create new and additional jobs.

Rob Marris: Perhaps the hon. Gentleman could rest his voice a little. I pose the question that I asked the hon. Member for Hertford and Stortford. Is he making a speech about clause 30, which he should have done when we debated that clause, the first part of which states that every contract of employment shall have the statutory minimum procedure from schedule 2? On the other hand, is he saying that the schedule 2 procedure should apply to all employers, regardless of how many employees they have, but that employers should not tell their employees about the application of that schedule 2 minimum procedure if they employ fewer than six people?

Mark Simmonds: I refer the hon. Gentleman to the answer given by my hon. Friend the Member for Hertford and Stortford. Businesses with fewer than five employees should be exempt from the raft of regulations in the Bill. I am not advocating a pick-and-choose situation. In a very small business, a small number of people work closely together—more closely than those in a medium-sized or large business. The additional procedures may create an atmosphere of animosity and tension that does not exist at present, which cannot be constructive if we aim to allow successful small businesses to fructify.
 I have some questions for the Minister. First, how will a small business deal with a persistent applicant, given the bureaucracy and work load that will be placed on the employer? 
 Secondly, what impact will the clause have on temporary workers, especially those on fixed contracts—bearing in mind clause 45, which we have yet to debate? In my constituency, around Boston, 
 many jobs are tangentially or directly involved with agriculture and are on either fixed contracts or a less permanent basis. In Skegness, a large number of employees work in tourism. I am concerned that, to avoid being caught by the provisions in clause 45, employers will avoid giving fixed contracts, and people will be employed on a daily rather than a longer-term basis. We will return to the situation of 100 years ago on the docks in London: people will turn up to find work on a daily basis because the small employer will not be prepared to employ them on a longer-term basis. 
 Thirdly, how will the collective dispute that circumvents procedures in clause 29 operate in practice in a small business? Will two employees with the same disgruntlement become a collective? Is there a de minimis number that needs to apply? 
 From my understanding of earlier debates, it seems that for small businesses caught by clause 34, after a minimal procedural fault by an employer, not only does dismissal become automatically unfair but the fines are increased. That may have a dramatic, if not fatal impact on the future of the small business.

Joe Benton: Order. May I point out to the hon. Gentleman that he has gone a little wide of the amendment?

Mark Simmonds: Thank you for your guidance, Mr. Benton. My final suggestion is that the small code for small businesses should exist on a voluntary and informal basis, because small businesses must retain their flexibility to enable them to react to circumstances.

Tony Lloyd: I cannot resist intervening—my hon. Friend the Member for Dudley, South (Mr. Pearson) will probably devastated by this, but I am astonished. We had a wonderful piece of nagging from the hon. Member for Runnymede and Weybridge, who spoke of this carefully crafted Bill that we all grudgingly accept is just about right. However, Opposition Members are now trying to unpick the whole thing by introducing one, narrow amendment, in order to do away with almost all industrial relations applying to firms employing fewer than five people.
 I hope that my hon. Friend the Minister will resist this very silly amendment. To talk about this being part of the inflexibility that so ties up small firms as to prevent their growth is nonsense. It is narrow in scope; it is about the need to inform employees of their rights—it is about information. It is interesting that nobody has picked up the valid point made a number of times by my hon. Friend the Member for Wolverhampton, South-West that it is not about exempting such people from the provisions of the Bill as a whole, it is solely about publicising it. In fairness, the hon. Member for Wealden seems to know that. I am not sure that his colleagues do. 
 The hon. Member for Boston and Skegness (Mr. Simmonds) argued that there is disincentive to grow from five to six. The same would apply if we built in this cut-off. It is anti-competitive between the slightly larger firm and the small one. That is an inflexibility and an unfairness and we should not include it in 
 legislation. However, not all small firms are destined to become the great and the grand. The little corner shop will remain a little corner shop, and it is true that the majority of small businesses stay small, want to stay small and do not intend to grow beyond the small employment limits.

Philip Hammond: Given that this is a probing amendment to address the impact of legislation not on small businesses but on micro-businesses, does the hon. Gentleman accept that the biggest hurdle to be cleared is that of going from zero to one employee? At that point, under what is proposed, the whole panoply of employment protection legislation and the requirement to follow procedures comes down on the new employer. I am sure that he will recognise that that is a very real and frightening barrier for a person who has been used to working alone, as a sole trader, to break through. That is the issue on which my hon. Friends and I are anxious to draw the Minister.

Tony Lloyd: There is a general argument about the ''burden of regulation''. However, Conservative Members will probably not be surprised if I say that we hear that on every occasion, whether the legislation is good, bad or difficult. The plea is always that small businesses cannot take one more step. However, small businesses have responsibilities as well as rights. They have a responsibility to operate as part of society. They incur responsibilities by taking on the right to employ, because that right has duties attached. Within that, giving minimal information to employees is not such a terrible thing.
 A number of businesses have fewer than five employees. They are not little micro-businesses, just out of the incubator. Some of them are well-established businesses of many years' standing. Some of them are very dynamic businesses that enjoy considerable turnovers and make extraordinary profits. The small business sector is often highly efficient in specialised areas. To say that in industries as diverse as print and information technology, firms will never grow and should be permanently exempt from the need to demonstrate their obligations to their employees is ridiculous.

Philip Hammond: The hon. Gentleman makes a sensible point. Perhaps he should have tabled an amendment to amendment No. 68, proposing a different threshold. Is he suggesting that there is an argument for going easy on new employers who have, perhaps, one employee, for a period of time after they first become employers? I readily accept that there are some very small firms of highly remunerated professionals who are not in the unfortunate position of the window cleaner who has just managed to take on his first employee.

Tony Lloyd: Opposition Members should remember that size is not everything. That is important in all aspects of life, but particularly in employment legislation. The amendment is the wrong way to
 approach the issue and it is counter-productive because it fails to recognise that small firms have obligations, just as large firms do.

Mark Prisk: I do not want to take the phrase ''size does not matter'' too far, but does the hon. Gentleman not recognise that it is important, wherever possible, to remove hurdles to small firms taking on their first members of staff? We should remember that small firms often deal with those who are struggling to find a job, particularly in the current jobs market. We want to probe the issue with the Minister so that the Government understand it. We may constantly talk about small businesses, but without constant pressure, their needs will sometimes be forgotten.

Tony Lloyd: The educative process that the Opposition are going through is very instructive. Of course we should consider the arguments about how we help firms to make the transition and how we help growing businesses, but even new businesses must recognise their obligations, particularly to others who are vulnerable. The employee in a small business is as vulnerable as the employer. Theirs is a mutual relationship, and their rights and obligations are counterbalanced. It is therefore wrong to approach the issue on the basis of size.
 It is important that information is available to the employee, and there are different ways to ensure that the small employer is aware of their obligations and to assist them in making information available to employees. If Opposition Members considered such approaches, I would support them, as I am sure the Government would.

Philip Hammond: At the risk of rerunning the entire Second Reading debate, may I ask whether the hon. Gentleman recognises that micro-businesses, which may be taking on their first employee, often face the unfortunate problem of competition with the informal sector? Their competitor is not a firm with five or 10 employees that does what it should do, but the chap round the corner who pays no tax or VAT and has no cognisance of his obligations as an employer. Our concern is that the small man who tries to run a legitimate business is not hampered in a way that makes him vulnerable to competition from the black economy.

Tony Lloyd: The hon. Gentleman will probably be pleased to know that that was one of the best points to be made on Second Reading, and it is very important. However, we must be careful not to respond to the black economy by eroding standards in the formal economy. It is right to call those who compete by avoiding their obligations to society cheats. We must establish that they indulge in a form of cheating, which is not noble or acceptable. They cheat society of what it should receive and they certainly cheat the honest employer, who tries to conform to acceptable standards. I recognise the need to consider measures to assist growing businesses, and all hon. Members hold that aim in common, although we might disagree about individual aspects of it. I certainly concede that
 we must deal with the black economy, although I would do that by stamping down hard on it. I hope that Opposition Members would be at one with me on that.
 My contribution has been much longer than I had planned, and I conclude by urging my hon. Friend the Minister to stick to his rather robust approach, reject the Opposition's blandishments, ignore their nagging and confirm that small firms will have to meet their obligations, just as slightly larger firms will.

Alan Johnson: This has been a fascinating debate, but much of it was not about the amendment. I shall not get involved in a debate about small businesses—

Philip Hammond: Oh!

Alan Johnson: Are Opposition Members seriously suggesting that no employment rights—that would presumably also include the minimum wage because that is included in schedules 3 and 4—would apply to companies with fewer than six employees? Come along to Third Reading, when I shall be pleased to engage in that debate. The problem is that Opposition Members are under a misapprehension. The reason why I will not answer the five questions or unravel the golden thread of the hon. Member for Boston and Skegness is because I would run into the same problems as the hon. Gentleman and step outside the remit of the clause and the amendment.
 The hon. Members for Wealden, for Hertford and Stortford, for Boston and Skegness and, it seems, for Runnymede and Weybridge are under a dreadful misapprehension if they think that the amendment would help small businesses. I hope that they will agree to withdraw the amendment. 
 First, let me remind the Committee of the purpose of the provisions in the Bill that deal with written statements. Most employees who work for their employer for one month or more have the right to receive a written statement of the main particulars of their employment. The clause will not change that, apart from in respect of the exemption. The amendment would not change that. Why should not employees be entitled to that information? Employers and employees need to know the basic terms and conditions on which the employee is engaged. After working for an employer for two months, employees are entitled to receive a written statement, and the amendment will not change that at all. The written statement sets out the key features of the employment relationship, which is fundamental to understanding rights and responsibilities in the workplace. In an environment where 48 per cent. of businesses who come before employment tribunals do not have internal procedures, employment tribunals complain, time and time again, that their work is dogged by the problem of getting to the core of the employee's terms and conditions. Whether a dispute is about holidays, redundancy or pay, both sides need to know what the basic terms and conditions are.

George Osborne: The Minister implies that small employers do not have to give any notice of disciplinary procedures but, as I understand it, when
 they employ someone, they must indicate to whom a complaint should be referred and how the complaint should be dealt with. He is now proposing that that should be included in a lengthy document, which sets out all the details in schedule 2, although he admitted in a previous debate that many of the 960,000 micro-businesses do not use written communication very much. Indeed, some may have limited clerical facilities. There is already a procedure whereby the window cleaner who employs an assistant says, ''If you have a problem, come to me.'' That can be delivered orally or in writing. The Minister is now suggesting that that window cleaner must also give his assistant a formally set out copy of schedule 2, even though he may not have access to a typewriter or word-processor. The Minister is misleading the Committee if he is suggesting that small businesses do not already have to comply with certain procedures, and those procedures are adequate.

Alan Johnson: I am not implying anything of the sort. I am merely stating that one of the things that bedevils employment tribunals is the absence of a written statement. The law already insists that an employer should give an employee a basic written statement, and the amendment will not change that. That is fundamental to an understanding of rights and responsibilities in the work place. It forms a record of the basis of the relationship between employer and employee, clarity on which is essential to prevent disputes from arising.
 As matters stand, all written statements must include information about handling grievances, but only those issued by employers with 20 or more staff are required to cover disciplinary procedures. That is not to say that disciplinary procedures need not exist in the case of other employers, but that there is no obligation on the employer to include them in the written statement. It is arguable that that situation is anomalous, but it would be more so in the light of the changes that the Committee merrily agreed, which is that the basic three-step and two-step procedures should apply in all workplaces. That is not in dispute. It has already been dealt with. 
 In future, under the Bill, all employers will have to operate statutory minimum disciplinary and grievance procedure, or something better, but that is not because of changes to the written statement requirements; other clauses imply those procedures, and they give employers and employees incentives to follow them. For example, they provide for awards to be increased or reduced when the procedures are not followed. The changes to the requirement for a written statement ensure only that employers have to inform employees about their disciplinary and grievance procedures. 
 It is important that all parties are familiar with the procedures. When we come to clause 37, the Committee will see that we have made them easier in several respects. At the moment, the employer cannot include the procedure in the contract of employment; it has to be made as a separate statement. Furthermore, the law implies that it cannot be handed to the employee until after he has begun his employment; that prevents it being sent with the letter 
 agreeing to employ that person. We are using clause 37 to sort out such ridiculous anomalies. However, it does not change the responsibility of employers to ensure a basic procedure. 
 One of our arguments has been that in 62 per cent. of cases no one in the workplace has discussed the issue. That is why small businesses without such procedures find themselves dragged before employment tribunals when they could have resolved those disputes in the workplace. The right place for such clarity to be provided is through the written statement; as all employers will in future be obliged to operate the procedures I believe that it is right that they should all be obliged to spell them out. 
 My hon. Friend the Member for Wolverhampton, South-West was right in his persistent questioning. Removing the 20-employee threshold will not create a new requirement on smaller employers to issue written statements. That is already required. Nor will it oblige them to introduce minimum procedures, as that will be required under other clauses. It will merely ensure that, when issuing the written statement, the employer must include information about its discipline procedures as they apply to the employee. 
 The effect of the amendment would be that employers would have to have a discipline and grievance procedure; and that they must issue a written statement. Those procedures would exist, but there would be no obligation on employers of fewer than six employees to tell those employees what the procedures were. With the best will in the world, it is a ridiculous amendment. I hope that it will be withdrawn.

George Osborne: Will the Minister concede that the clause will require very small business to have much more complicated employment contracts? Indeed, when he was resisting a powerful argument made by the hon. Member for Wolverhampton, South-West about written statements at different stages during the schedule 2 procedure, he made the precise point that small businesses do not have access to the sort of clerical facilities that may be required to produce a more complex employment contract. I return to the example of the window cleaner. Is the Minister saying that a window cleaner employing a window cleaning assistant now needs a complicated employment contract that sets out all the details of schedule 2?

Charles Hendry: The Minister's response was disappointing. The amendment was essentially intended to probe the Minister and giving him a chance to talk about the effect of the Bill on micro-businesses—an opportunity that he declined to take. Specific points put to him were entirely in the spirit of the relevant provisions. For instance, my hon. Friend the Member for Boston and Skegness asked whether the clause relates to part-time workers, but Minister did not give any guidance or clarification on those matters. That was particularly disappointing.
 We responded to a plea for help from the Federation of Small Businesses, which has spoken to us eloquently about the pressure of legislation and regulation and 
 has sought to have some of its smaller members spared from further regulations. Again, the Minister has turned a deaf ear. 
 We sought to offer a degree of compromise to the hon. Member for Manchester, Central and to try to find a place where he and we can meet in the middle. We are not set on particular numbers, but we feel that the Minister should have dealt more thoroughly with some serious issues. We must recognise that the Minister seems reluctant to move further, but I will seek leave to withdraw the amendment.

Alan Johnson: With the best will in the world, I cannot see this as a probing amendment. An amendment that simply excluded businesses of fewer than six employees from the statutory minimum procedures might, at a stretch, have been a probing amendment. We could have discussed why the Government believe, as do 86 per cent. of respondents, including the Small Business Council and the Forum of Private Business, that it is in the best interests of small businesses not to be left subject to employment tribunals without having the help that they need to resolve disputes in the workplace.
 If Opposition Members were being honest, they would agree that the amendment is not probing in nature. The measure is purely about written statements, and nothing else. I do not want to be discourteous; I usually try meticulously to answer questions. The hon. Member for Boston and Skegness asked a relevant question, which I will answer. Yes, the measure would apply to part-timers, because part-timers will be treated in the same way as full-timers. 
 The hon. Member for Hertford and Stortford asked whether the measure would mean that every employer had to draw up and issue a new statement to employees. That is not how we envisage matters working. We intend to bring the measures into force in such a way that they can be issued as a statement of change. We do not intend to revise the whole procedure for businesses that do not already have a disciplinary procedure; we just want to add to the written terms and conditions. 
 That brings me on to the point made by the hon. Member for Tatton (Mr. Osborne), who suggested that the measure would be burdensome because it would involve employers putting tons of paper in front of an employee. We toyed with the idea of saying that the contract of employment should be the written statement. We backed away from that for the reasons given to us by many employers and trade unions. They pointed out that some contracts of employment run to a couple of volumes. 
 The idea of a concise written statement setting out the basic terms and conditions, which already exists in law and will not be changed by the Bill, was felt to be right. The measures add the basic minimum procedures to that. I do not want to return to the argument of the other day about the garage in Hull having to produce everything in writing.
 The Committee has ensured that the procedures are simple. It would have been onerous to add 56 clauses from the ACAS code to the contract of employment. Employers, many of whom will have procedures already, have only to attach such procedures to terms and conditions. If they do not have disciplinary and grievance procedures, they need to introduce and apply such regulations. If they have disciplinary procedures but are excluded by the get-out clause for those with fewer than 20 employees from putting that in the statement, they need to change that and put those procedures in the statement. I do not think that that is onerous. 
 Having made that distinction, I should say that I do not agree that the Bill will add to burdens on business. Let us discuss other measures as we come to them. I am perfectly happy to debate the fixed-term workers directive, maternity leave and paternity leave when we get to those issues. However, to try to discuss those broad issues in a debate on a narrow clause that relates purely to written statements would not get us far, even in terms of the arguments of Opposition Members.

Mark Prisk: Part of our point is that every brick in the wall is another burden for small businesses. Sometimes they will be perceived as tiny, but the cumulative effect is often—I must mix my metaphors with care—the straw that breaks the camel's back.

Alan Johnson: We are extraordinarily sensitive to the argument that we are burdening businesses with regulation of any kind. That is why we set up the Small Business Service and why we have introduced the various regulatory regimes. The argument in terms of these tribunals is that micro-businesses end up in front of employment tribunals. It costs them money and time and very often they could have sorted out their disputes through a clear written statement and by disciplinary and grievance procedures in the workplace. That is the kernel of this part of the Bill.

Charles Hendry: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 36 ordered to stand part of the Bill.

Clause 37 - Use of alternative documents to give particulars

Philip Hammond: I beg to move amendment No. 87, in page 39, line 41, leave out 'meet' and insert 'discharge'.

Joe Benton: With this it will be convenient to take amendment No. 85, in page 40, line 8, leave out 'met' and insert 'discharged'.
 No. 86, in page 40, line 12, leave out 'met' and insert 'discharged'. 
 No. 88, in page 40, line 31, leave out 'met' and insert 'discharged'.

Philip Hammond: It is generous of the Minister to place it on the record that he is willing to debate the remaining areas of the Bill. I look forward to discussing maternity and paternity leave in due course.
 After the heated discussion of the previous amendment , I am pleased to return to matters purely semantic. I had doubts about tabling the amendments, but the more I looked at the Bill, the more I concluded that I have never come across the concept of meeting an obligation. One discharges an obligation, and as far as I am aware, that terminology has been used in other legislation. The clause would be much more elegant and much more readily understood if it said at line 40 on page 39, ''the document contains information which, were the document in the form of a statement under section 1, would discharge the employer's obligation under that section,'' and so on. The remaining amendments repeat the change of the word ''meet'' to the word ''discharge''. I should be fascinated to hear which professor of etymology or whichever science is relevant here—I have probably got that completely wrong and am inadvertently talking about the study of insects—has determined this radical departure in drafting language so that we now have the bizarre concept of meeting an obligation. Where does one meet this obligation? In the street? In the pub?

Alan Johnson: I do not know whether I shall satisfy the hon. Gentleman, but I shall have a go.
 First, clause 37 helps employers to comply with the requirement to give an employee a written statement of employment particulars. At the moment they have to supply a document that is such a statement, even if they have also issued a contract of employment or a letter of engagement; they have to do it twice. To meet the requirements of the legislation, they probably have to do so after the employee starts work. We propose that a contract of employment or a letter of engagement containing the necessary particulars, given before or after the employee starts work, will meet the employer's obligations under the Employment Rights Act 1996. 
 The hon. Gentleman asked who is behind the choice of words. Parliamentary Counsel is my plea, and I am assured that the words ''meet'' or ''met'' mean that the employer has done what he is obliged to do and that nothing further is necessary. If hon. Members are concerned that those words mean anything less, I am happy to reassure them. Changing ''meet'' to ''discharge'' and ''met'' to ''discharged'', as the amendments propose, would add nothing. The amendments are unnecessary, and I ask the hon. Gentleman to withdraw them.

Philip Hammond: The amendment would add nothing but elegance. This stuff is dreary enough.

Philip Hammond: The amendment would add nothing but elegance. This stuff is dreary enough.

Alan Johnson: We don't do elegance.

Philip Hammond: Well, he should try. Elegance in the language of parliamentary drafting is to be sought after. It occurs to me that ''satisfied'' would have done
 just as well as ''discharged''. I am disappointed that there is not a more substantive reason for departing from what I understand to be a conventional use of language, but clearly I do not want to dig in over the matter if the Minister feels so strongly. Reluctantly, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 37 ordered to stand part of the Bill.

Clause 38 - Failure to give statement of employment particulars, etc.

Philip Hammond: I beg to move amendment No. 80, in page 41, line 21, after 'document', insert
'purporting to be a document'.

Joe Benton: With this we may take the following amendments: No. 81, in page 41, line 28, after 'document', insert 'purporting to be a document'.
 No. 82, in page 41, line 33, at end add 'and, 
(d) the breach is material to the proceedings in question before the tribunal'.

Philip Hammond: I will not say that this amendment is a probing one, because a substantive point is involved, but perhaps it has been dealt with in a way that I have not understood. The matter is complicated. The purpose of clause 38(4) is to distinguish and deal with two classes of defaulter: the employer who delivers a statement that turns out not to be the requisite statement, being defective in some way; and the employer who delivers no statement at all. Common sense tells us that there is a difference between the offence of thumbing one's nose at the rules and saying, ''I am not going to do what is required'' and the probably lesser one of having a stab at the task but making a hash of it and delivering a defective statement.
 Subsection (4)(a)(ii) refers to an employer who 
''has not given the employee a statement purporting to be a statement under that provision''. 
The important point is that the statement may or may not discharge the employer's duties under the provision, but it at least purports to do so. The sub-paragraph continues the definition, 
''or a document capable under section 7A . . . of performing the function of such a statement''— 
a substitute document. 
 It seems to me that to be consistent, and for symmetry, the latter passage should refer to ''a document purporting to be a document capable under section 7A . . . of performing the function of such a statement''. Anything less treats the substitute document, or the document delivered as capable of being used as a substitute document, differently from a statement that is delivered as a statement under the provision, but which is not one. 
 It is difficult to make the argument concise, but there is a clear lack of symmetry between the reference to a statement purporting to be a statement and the lack of 
 a matching reference to a document purporting to be a document. If I have missed something about this, perhaps the Minister will clarify the matter.

Alan Johnson: Clause 38 requires employment tribunals, when an employee has successfully complained about the breach of another employment right, to consider whether the employee was given a written statement of employment particulars by his employer. If not, or if the statement is incomplete or inaccurate, the tribunal must increase the compensation; alternatively it must award compensation if the relevant jurisdiction does not allow compensation or the tribunal has not chosen it as a remedy. A mitigation of between 5 per cent. and 25 per cent. is applied.
 It is at this point that matters become complicated. Subsections (4)(a)(ii) and (4)(b)(ii) refer to 
''a statement purporting to be a statement'' 
under that section, which means the relevant section of the Employment Rights Act 1996, or 
''a document capable under section 7A of that Act . . . of performing the function of such a statement''. 
Those final words relate to the earlier phrase 
''a statement purporting to be a statement'' 
in that section. Section 7A of the 1996 Act refers to a document, either a contract of employment or a letter of engagement, capable of performing the function of a statement purporting to be a statement under the Act. It is not necessary to add the words 
''purporting to be a document'' 
in either case, as amendments Nos. 80 and 81 propose. The hon. Gentleman is right; he is doing his job, which has forced me to re-examine the clause. I took another Nurofen as a result, but I am satisfied that the clause relates to the 1996 Act. As in the previous amendment, we have agreed that the contract of employment and the letter of engagement can be written statements. That makes it easier for small businesses because they do not have to produce a third statement. 
 Amendment No. 82 is different from, although correctly grouped with, the other amendments. We have deliberately not limited compensation to occasions when an employer's breach of the written statement requirements is relevant to the matter complained of by the employee, but such would be the effect of amendment No. 82. The clause allows the tribunal to vary the award and it would be free to relate that to the effect of the employer's breach. It would be wrong to restrict tribunals to awarding compensation only when there is such an effect. 
 The written statement is a key document in clarifying the relationship between employer and employee, and in helping to avoid workplace disputes. If a dispute prompts an employee to complain successfully to a tribunal and it is found that the employer has not met his written statement obligations elsewhere, the employer should incur some penalty regardless of whether the breach is material to the case being heard. I am therefore unable to agree to the hon. Gentleman's amendment and I hope that he will withdraw it and not press the rest of the group.

Philip Hammond: I simply do not agree with the Minister on the first two amendments, but I accept that the matter is complicated. The Minister has the drop on me at the moment because he has the wording to which the clause refers. It is not obvious that a document purporting to be capable
''of performing the function of a statement'' 
 is the same as a document capable 
''of performing the function of a statement'' 
purporting to be that statement. I think that is right, and I shall reflect on it. If that is how the clause works, fine. That is not immediately obvious because it is not the statement that we are examining in the latter part of the subsection: it is the document capable 
''of performing the function of a statement''. 
 A statement purporting to be a statement is not strictly relevant.

Alan Johnson: I have lost the will to live.

Philip Hammond: I have performed my function admirably, Mr. Benton, and profess myself well pleased with today's proceedings.

Kevin Hughes: Is the hon. Gentleman a lawyer, or just purporting to be a lawyer?

Philip Hammond: The hon. Gentleman has touched on my Achilles heel. I am not a lawyer, but there is something of the frustrated lawyer in me.
 The language of the Bill is impenetrable. Many Bills that we consider depend on references and amendments to other legislation, which can make it impossible to discern the end effect from a reading of the Bill. That is unfortunate. I was struck by that peculiar lack of symmetry and I shall go away and reflect on it further. 
 I am not surprised that the Minister did not accept amendment No. 82; I am slightly surprised that I forgot to speak to it in my opening remarks, but we shall let that pass. However, there is an idea—it lies behind much of today's discussion—that breaches of procedure must be material and have some impact before people are penalised in respect of them. There was a huge sigh of relief from employer organisations, especially small business organisations, when the Minister decided to tackle the matter head on and say that issues of fairness in dismissal and in the way in which people are dealt with at work must be about substance, not form. The issue cannot be minor nit-picking over whether procedures have been followed and whether, for example, the correct word has been used; it must be something more substantive. 
 However, the Minister then introduced the minimum statutory procedures to which he does not extend that logic. He says that if someone fails to comply with those procedures to the letter, they will be penalised regardless of whether that failure has any impact. That is slightly out of keeping with the his general tone and approach to the clause, and I tabled the amendment to probe his thinking on the issue. That said, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn.

Philip Hammond: I beg to move amendment No. 83, in page 42, line 15, leave out paragraph (b).

Joe Benton: With this we may discuss amendment No. 84, in page 42, line 18, leave out paragraph (c).

Philip Hammond: Paragraph (b) gives the Secretary of State the power by order to
''make provision, in relation to a jurisdiction listed in Schedule 4, for this section not to apply to proceedings relating to claims of a description specified in the order''. 
That is a wide power for the Secretary of State to disapply clause 38. If the Minister wants such a wide power, I should like him on the record to constrain his use of that power by limiting its effect. I imagine that he has in mind specific cases in which he intends to use the powers. I suspect that my hon. Friends share my belief that it is far too wide an order-making power to give the Secretary of State without some explanation of why it is needed and how the Minister intends to use it on the Secretary of State's behalf. 
 Amendment No. 84 will be so familiar to Committee members as scarcely to require an explanation. It deals with the Secretary of State's ability by order to provide that a person who is not an employee is an employee and a person who is not an employer is an employer. Again, I find deeply disturbing the idea that something can be what it is not merely because the Secretary of State says so. We have had that discussion before.

Alan Johnson: The jurisdictions set out in schedule 4 are the same as those in schedule 3. There may be occasions on which it is inappropriate for statutory procedures to apply to a jurisdiction in all circumstances, so schedule 3 would need to be amended. We would ordinarily expect to modify schedule 4 to reflect such changes. They would be rare and, although I always like to give an example, I have unfortunately not got one for the hon. Gentleman.
 The measure is prudent. We have taken the power to amend schedule 3; as schedule 4 sets out exactly the same jurisdictions, it would be wise to hold that in reserve. The hon. Gentleman asked for an assurance that we will not use the power often. It will be used rarely; nevertheless the power that amendment No. 83 would exclude, and the power to amend those jurisdictions to which adjustment of awards apply, are equally necessary. We will consult on what exclusions should be made by regulation under either power, and consider carefully before finalising them. 
 Subsection (10)(a) gives a power to add new jurisdictions to the list in schedule 4. When and if we come to consider making such additions, it may become apparent that the written statement penalty should apply to some descriptions of claims that can be brought under the jurisdiction, but not others. It is therefore only prudent to be able to exclude the penalty from applying to particular descriptions of claims within a jurisdiction that is added. 
 Amendment No. 84 is an old friend. The hon. Gentleman mentioned that we had been around this course several times. He asked for assurances that we 
 would not want any change in advance of the worker-employee review, which we intend to conduct next year. I am happy to give that assurance again on this amendment, as with the others.

Philip Hammond: Cue the hon. Member for Manchester, Central.

Alan Johnson: As it is coming up to Christmas, I will save my hon. Friend the Member for Manchester, Central from making his intervention. As in the previous debate, I will respond to the intervention before it is made. The Secretary of State has given a firm assurance that that review will be carried out next year.
 I urge the hon. Gentleman to withdraw the amendment.

Philip Hammond: I have heard the Minister's comments. I am disappointed that, even with the assistance of his substantial resources, he has been unable to come up with an example of why he might need the power. I am reluctant to give Secretaries of State wide powers to act by order in any case, but when the combined resources of the Department of Trade and Industry and parliamentary draftsmen, despite
 racking their brains over the weekend, cannot come up with a single example, it suggests that the Minister is gold-plating the facilities available.
 I suggest strongly that we should impose the example test as a minimum requirement. If even the Minister cannot think of the weirdest and most outlandish example of when he might need to use the power, it is probably a power that he should not have. I am sure that my noble Friends in the other place will have noted the Minister's inability to provide a single example and will want to see whether his noble Friend, given a couple of months' notice, will have come up with something. In the meantime, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 38 ordered to stand part of the Bill. 
 Schedule 4 agreed to. 
 Clauses 39 to 41 ordered to stand part of the Bill.

Ian Pearson: Despite the ritualised protests from the hon. Member for Runnymede and Weybridge about the timetable motion, we have given the Bill detailed and thorough consideration. We have proceeded at a measured pace and agreed an amendment to clause 34 and the basis of a later amendment. We have done some good work.
 Further consideration adjourned.—[Mr. Pearson.] 
Adjourned accordingly at one minute to Seven o'clock till Tuesday 8 January 2002 at half-past Four o'clock.